FXCM offers Dealing Desk execution for traders whose primary concern is low spreads for 12 of FXCM's most popular currency pairs. The Dealing Desk offering, however, has certain trading limitations. In the Dealing Desk model, FXCM can act as a dealer, setting the prices and spreads for some of the currency pairs on which you trade. In this execution model, FXCM can see your stops and limits and we can profit from your trading losses. In our experience, this is common market practice amongst brokers that offer Dealing Desk execution.
Because we can create the prices on which you trade, FXCM's dealing desk execution option is able to offer spreads for FXCM's 12 most popular currency pairs that may be up to one pip lower than those provided by the No Dealing Desk (NDD) model. While FXCM believes that NDD execution provides the best all-around trading experience, we also offer dealing desk execution as an option for traders whose primary concern is low spreads on FXCM's 12 most popular currency pairs.
Our Dealing Desk is Different
Dealing Desk execution is used by many brokers in the forex industry. However, FXCM's Dealing Desk execution offering is unique because it shares important features with our No Dealing Desk (NDD) execution, such as:
- No re-quotes1
- No restrictions on stops and limits
- Orders can be broken up and filled at multiple prices (partial fills).
But no matter what the similarities, the Dealing Desk offering has certain trading limitations. We recommend NDD execution because we believe it provides our best all-around trading experience.
When operating a Dealing Desk the firm may actively be taking a position in the market, which exposes the firm to market risk. When you are long, the Dealing Desk may be short. When you are short, the Dealing Desk may be long. So your losses can equate to the Dealing Desk's profit. Alternatively, your profits can equate to the Dealing Desk's loss. Certain strategies expose Dealing Desks to more risk, such as automated strategies or strategies that trade at a high frequency. To better manage their market risk, some Dealing Desk firms actively intervene in their clients' trading by re-quoting orders, delaying execution, skewing prices, or widening spreads.
At FXCM we offer both Dealing Desk and NDD execution. If you are trading on Dealing Desk execution and your trading style exposes us to more risk than we're comfortable with, FXCM may, at our sole discretion and at any time, change your execution type to NDD. This is how FXCM can comfortably offer both options without having to resort to some of the common “dealer intervention” practices listed above which take place at many forex brokers. There are no restrictions on the trading strategy that you use on the NDD execution model, however the tighter spreads for FXCM's 12 most popular traded currency pairs, that may be available on FXCM's Dealing Desk offering would no longer be available to you. While all trading styles are permitted on the Dealing Desk execution model, we encourage traders who use automated, high-frequency or scalping strategies to open an NDD account, which is fully compatible with all trading strategies. Please note that FXCM reserves the right to switch your execution type to No Dealing Desk should your trading style expose us to more risk than we're comfortable with.
1 No Re-Quote Policy
FXCM maintains a no re-quote policy. Circumstances exist based on order size, trading pattern, and market conditions where individuals may not receive execution at the requested rate. Orders are executed at the next available rate within the trader's parameters, subject to market conditions. The difference between the requested rate and final execution price may be more or less advantageous based on the market activity and available liquidity.
When trading Forex on both FXCM's dealing desk and no dealing desk execution models, FXCM is the final counterparty to these transactions. In both execution models FXCM aggregates the bid and ask prices from a pool of liquidity providers. The quotes that are displayed on FXCM's platforms are the best available bid and ask quotes after FXCM's mark-up has been applied. FXCM's mark-up may vary by liquidity provider and account type. Many factors are taken into account when a mark-up is decided including but not limited to a liquidity provider's quote rejection rates, network performance (e.g., latency), depth of liquidity, and overall quality of execution. Please note that FXCM may receive payment for order flow from its liquidity providers. On the Dealing Desk execution model FXCM can act as the dealer on some or all currency pairs. There are also back up liquidity providers that fill in whenever FXCM does not act as the dealer. Please note that FXCM's Dealing Desk employs fewer liquidity providers than the No Dealing Desk (NDD) execution option.
FXCM does not guarantee that quotes, prices, or spreads will always be better on one form of execution as compared to the other. Customers should consider many factors when deciding which execution type best suits their needs (e.g., trading style or strategy). For more information, see our Execution Risks. Please note that contractual relationships with liquidity providers are consolidated through the firm's U.S. affiliate, Forex Capital Markets, LLC. Forex Capital Markets, LLC maintains agreements with multiple price providers and in turn provides technology and pricing to the group affiliate entities.